Raleigh, N.C. — Lawyers for Duke Energy and North Carolina environmental regulators spent much of Monday behind closed doors working out a settlement to a record $25.1 million fine the state imposed in March for contamination from a coal ash pond at its L.V. Sutton Steam Plant near Wilmington.

The state Department of Environmental Quality officials said they levied the fine because of the extent of groundwater contamination near the coal ash pond. Environmental groups contend that both Duke and the state have known for years that the ash pond at the Sutton plant and other power plants have been leaking toxins into groundwater and nearby rivers and streams.

Coal ash is the material that's left over when coal is burned for fuel. While much of it is inert, it does contain toxic levels of certain substances, such as thallium, mercury, lead and other materials harmful to humans and wildlife.

Duke contends that the fine was regulatory overreach, and the Charlotte-based utility accused DEQ of violating the agency's policies and procedures as well as state statutes.

An administrative law judge on Monday ordered the state to turn over hundreds of pages of documents that Duke says regulators intentionally withheld. Both sides will continue working Tuesday on a possible settlement, but if they cannot reach a deal – and if the judge decides not to dismiss the fine – the two will be in court in October for a full hearing on the issue.

A state law adopted last year requires Duke to close down all of its ash ponds by 2029. A commission was set up to establish a priority list for the effort, but Duke has already started removing ash from several retired plants.

Duke pleaded guilty in May to violating the federal Clean Water Act in connection with leaks at several coal ash ponds across North Carolina – but not the Sutton plant – and agreed to pay $102 million in fines and restitution.